Refer to case $2$ shown above. A study indicates Alpha Division can avoid $$5$ per unit in shipping costs on any sales to Beta

Division.

a$.$ What is Alpha Division's lowest acceptable transfer price?

b$.$ What is Beta Division's highest acceptable transfer price?

c$.$ What is the range of acceptable transfer prices $($if any$)$ between the two divisions? Would you expect any disagreement

between the two divisional managers over what the exact transfer price should be$?$

d$.$ Assume Alpha Division offers to sell $46,000$ units to Beta Division for $$120$ per unit and Beta Division refuses this price.

What will be the company's loss in potential profits? Required $1A$ to Required $2A$ to Required $3A$ to

$1$C

$2$D

$3$D

Required $4$

Refer to case $3$ shown above. Assume Beta Division is now receiving an $8\%$ price discount from the outside supplier.

a$.$ What is Alpha Division's lowest acceptable transfer price?

b$.$ What is Beta Division's highest acceptable transfer price?

c$.$ What is the range of acceptable transfer prices $($if any$)$ between the two divisions? Will the managers agree to a transfer?

d$.$ Assume Beta Division offers to purchase $36,000$ units from Alpha Division at $$140$ per unit. If Alpha Division accepts this

price, would you expect its ROI to increase, decrease, or remain unchanged? Refer to case $4$ shown above. Assume Beta Division wants Alpha Division to provide it with $123,200$ units of a different

product from the one Alpha Division is producing now. The new product would require $$53$ per unit in variable costs and would

require Alpha Division to cut back production of its present product by $46,200$ units annually. What is Alpha Division's lowest

acceptable transfer price?

Lowest acceptable transfer priceaccounting chap $11$